FBR Catches Importers Misdeclaring Fabric to Get Duty-Free Benefits

The textile industry has commended the Federal Board of Revenue (FBR) for its action against importers who have been misrepresenting fabric to qualify for duty and tax exemptions under the Export Facilitation Scheme (EFS). The All Pakistan Textile Mills Association (APTMA) revealed that customs officials in Pakistan have commenced more rigorous physical inspections and laboratory tests of fabric shipments under this scheme.

APTMA noted that greige fabric was excluded from EFS in August 2025, yet these imports persisted through deceptive declarations, preventing the government from collecting revenue and damaging local fabric producers. According to APTMA, certain consignments were found to contain food coloring instead of the appropriate dyeing, resulting in customs recording breaches.

The association appealed to the FBR to extend physical inspections and laboratory testing to all fabric imports under EFS nationwide, including via dry ports. APTMA also called for confirmation of importers' manufacturing facilities, suggesting that some businesses may be lacking the necessary equipment to process fabric, potentially diverting imported material into the local market instead.

The association urged authorities to revoke licenses from companies violating the rules and to pursue legal action when necessary. APTMA Chairman Kamran Arshad emphasized that ongoing enforcement is crucial to prevent the EFS from being exploited for tax evasion and to safeguard local manufacturers who have invested in production and employment.

The association expressed support for further measures by the FBR and Customs to ensure the scheme remains directed towards legitimate export-related activities.